When Local News Dies – Local Government Does Not Thrive

Dermot Murphy, finance professor at the University of Illinois Chicago and co-author of an economic news report, told KGNU the real impact that dying newspapers have on cities across the US.

Given that a lack of local papers leads to less civic participation from citizens and political leaders, Murphy decided to investigate/research what happens on the local level in terms of government loan plans.

“A loss of local journalism it is fairly widespread…across the United States”

Murphy and his co-authors found that local governments end up taking more loans, and more risky loans. They looked specifically at loans that have high interest rates. The higher the rate, the more likely that it is a risky loan. He stresses that higher interest rates mean more money out of the pockets of tax payers – and even government wages. When local governments go unchecked, Murphy says that these types of loans occur. His data essentially correlates the decrease in local news to an increase of risky local government loans.

Without a local newspaper checking government spending and investments, a watch dog role that the forth estate fills, there is less political accountability. With news going digital, Murphy finds that,

“Online news organizations tend to focus on national news … so it looks like local is being more neglected.”

For more information on the issues with the closure of local news organizations read his report here.